Rep. Manzullo: Jobs bill needs further work, more incentives

In an era of polarization in Washington, there is a Manufacturing Caucus headed by U.S. Reps. Don Manzullo (R-IL) and Tim Ryan (D-OH) that works to bring legislation to assist manufacturers.

09/13/2011

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The Caucus recently introduced legislation in conjunction with Senators Kirsten Gillibrand (D-NY) and Mike Johanns (R-NE) that would create up to a 30% tax deduction to encourage commercial and industrial entities like manufacturing facilities, office buildings, schools, hospitals, power plants, hotels, and universities to go beyond minimum mechanical insulation requirements in new construction and retrofit projects and increase their maintenance activities. The Caucus estimates if implemented, the legislation would save $35 billion, reduce 170 million metric tons of CO2, and create more than 25,000 jobs for skilled craftsmen in all 50 states within weeks or months.

In light of President Obama’s proposed jobs bill that was delivered to Congress this week, we asked Manzullo, a presenter at the 2011 Manufacturing/Automation Virtual Summit, to comment on the proposal from both his position in the GOP and as a member of the Caucus:

CFE: From the perspective of the Manufacturing Caucus, evaluate President Obama’s speech in terms of how the proposals can help manufacturing.

Manzullo: Unfortunately, the President’s speech didn’t include much to specifically help manufacturing. I was encouraged by his call to clear the way for three market-opening agreements that would allow more American-made products to be sold in Panama, Colombia, and South Korea. I am also pleased the President mentioned the Skills Certification System to provide the right training to match skilled workers with available jobs. I also welcome his initial efforts in reviewing government regulations. I’m also looking forward to analyzing the specifics of his corporate tax reform that would eliminate loopholes while lowering rates.

However, most of his plan will not greatly impact the manufacturing sector. In fact, some provisions may overwhelm the positive benefits noted above, such as once again singling out the oil industry for special retribution in the tax code, which would only encourage further dependence on unstable sources of foreign oil. Once again, the President raises the canard of the “rich” not paying their fair share of taxes without understanding that the proportion of the tax burden paid by the “rich” has already grown from 41% in 2001 to 46.3% in 2008; the average tax rate of the “rich” (23.27%) is higher than any other tax bracket (15.68% for someone like Warren Buffett’s secretary who may be in the top 25% tax bracket, earning $67,000 per year); that the “rich” are already scheduled to pay $210 billion more in taxes starting in 2013 as part of the new Democratic health care law; and that his proposal would subject nearly 50% of all small business income to even higher taxation.

So, on the one-hand, the President would provide some modest tax relief to small businesses while taking it away on the other hand with other tax increases. The President also fails to comprehend the extent of the regulatory juggernaut that his Administration has created, with 219 proposed rules awaiting final approval that each have a greater than $100 million impact on the economy (not counting the hundreds of regulations that have yet to written to fulfill the requirements of the President’s health care and financial services overhaul laws).

The best way the President can spur job creation and bolster manufacturing in America would simply be to announce a moratorium on tax increases and unnecessary regulatory burdens that threaten our job creators. These were the main concerns I heard from small employers during several business roundtables I hosted in northern Illinois in August.

CFE: What additional proposals or initiatives would you like to see a final bill contain?

Manzullo: I would like to see President Obama seriously and specifically address the overregulation of many industries in the United States. I agree with the President that every rule should meet the “common sense test.” Regulations should protect people from environmental and health hazards and unsafe workplace practices. But overregulation will continue to result in jobs, companies, and potentially entire industries relocating overseas.

I reject his characterizations that Republican concerns about regulations will lead to a “race to the bottom.” For example, the Department of Health and Human Services has labeled styrene as a human carcinogen that causes cancer even though most other scientific studies disagree. Styrene is a basic ingredient in products such as plastic, fiberglass, and composites. Unless changed, this designation by HHS could result in thousands of jobs in the plastics and composites industries relocating abroad without protecting human health.

Additionally, I have long believed that a robust export agenda is a key part of our path to national recovery. The Milken Institute estimates that export control modernization could generate 340,000 jobs over the next 10 years. I was disappointed the President did not specifically mention export control reform, as he did in his 2010 State of the Union address. He also did not mention extending some of the basic small business tax cuts that are scheduled to expire, such as bonus depreciation of equipment purchases that helps our manufacturers.

Finally, there was no mention of additional domestic energy production. A recent study by the consulting firm Wood Mackenzie estimates that expanded oil and gas development in the U.S. could add up to 1.1 million jobs over the next 10 years.

CFE: The issue of the Skills Gap for American manufacturing has been the single biggest issue our readers face as they try to improve their manufacturing operations. What can and should Congress do in terms of job retraining programs to help move workers into these needed skilled jobs?

Manzullo: I completely agree we have a problematic manufacturing skills gap in this country. I have heard from numerous manufacturers in Northern Illinois who cannot find trained workers to fill open positions, even in an area with double digit unemployment. But the President’s Fiscal Commission has correctly identified that the government funds more than 44 job training programs across nine different federal agencies. This overlap of services leads to confusion and unnecessary bureaucratic overhead that could be better used to train individuals. We need to streamline these job training programs so they help unemployed Americans get retrained into jobs that actually exist.

I also commend community colleges across the country, particularly those who have specialized programs in manufacturing. For instance, the Associates Degree in Process Technology prepares students for careers in the process industry. Additionally, the Manufacturing Institute has created a Skills Certification System so that any employer across the nation knows that if a person has received this certificate, he or she can be productive and successful in entry-level positions in any manufacturing environment.

CFE: What is the responsibility of manufacturers themselves to help improve their business position? What can and should they be doing to help themselves?

Manzullo: First, manufacturers must make sure their companies meet all the applicable global manufacturing standards. You cannot compete in this global economy if you do not have a world-class operation. This includes having an up-to-date, informative website and a live person answering your phone. In addition, manufacturers should be looking for customers all around the world. The United States only has 4% of the world’s consumers. There are many resources available to help you find and succeed in overseas markets (www.export.gov). Currently, many manufacturers are able to weather the downturn in the U.S. economy because they have laid the groundwork in exporting abroad.

CFE: Your initiative announced on Sept. 8 talks about the government investing in retrofit and maintenance of mechanical insulation, which will drive jobs in that industry while reducing energy usage. The bill’s introduction received bipartisan support in both houses of Congress. What is the time frame for action on the bill? Can Congress move these proposals by the end of the year?

Manzullo: Hopefully, we can move the legislation by the end of this year as part of a larger bill primarily designed to spur economic growth and create jobs, assuming that Congress does not enact fundamental, comprehensive tax reform that eliminates all tax incentives in the effort to cut the federal budget deficit.

CFE: In general, is there enough will to move serious job creation and tax proposals through Congress by year’s end?

Manzullo: It will not be one big, comprehensive package. The Republican-controlled House will move a series of regulatory reform bills during the coming weeks to improve the business climate in the United States and provide more certainty to our nation’s job creators. The House also plans to move the three trade agreements later this fall. In addition, the upcoming recommendations of the Joint Select Committee on Deficit Reduction will provide an opportunity to possibly pass some tax reform. Hopefully, the President’s comments can be married with his Fiscal Commission’s recommendation on fundamental corporate tax reform. The Milken Institute estimates that bringing down the corporate tax rate to the average charged by other industrialized nations could generate over 2.1 million jobs over the next 10 years. Some of these provisions will pass as separate, stand-alone measures or could be incorporated into a larger bill dealing with other matters.

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Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

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